the 85th annual academy award nominations announced just minutes ago. presidential drama lincoln getting a leading 12 oscar nominations including a nod for best picture. life of pi was next with 11. the awards ceremony will be held in hollywood on february 26th. seth mcfarlane or -- >> yes. >> on too late for me. >> mario for the last word. >> it's a great lead-in the academy awards bay one of the stocks i'll talk about was a product of financial engineering. sum milt red stone. i said the stock would double. it did. and i said four years, it did it earlier prp i think you have another double in the stock next three years. the stock $59. when they split off, they will earn $9 a share.

great balance sheet. >> mario, thank you. a lot of fun. we have to go. we'll talk about hot dogs next time we see you. >> you bet. >> make sure you join us tomorrow. "squawk on the street" begins right now. good thursday morning. i'm melissa wlee wilee with jim and david faber. let's get a check on u.s. futures and how we're setting up. positive data out of china. china exports came in much stronger than expected. jobless claims coming in 9,000 above consensus estimates. a higher open at this point, dow about 52 1/2, s&p looking to open up 8. as for the picture in europe, of course all eyes are on the esc presser, ecb and bank of england leaving rates unchanged. the question is will draghi open the door for the possibility of a cut. so that's on our radar.

italy biggest gainer there up more than 1%. our road map this morning starts in washington. jack lew officially nominated as treasury chief. lew is known for his role in the being acrimonious talks in 2011. what could it mean this time. >> tiffany disappoints again with weaker holiday sales. there was weakness in the americas, strength in asia. so how much of a read through to the rest of retail is this earnings report? nokia shares soaring this morning after a bullish outlook for the first quarter. and herbal life's big day to defend itself against bill ackman's damning allegations. we'll have the latest and the ceo join us later in the show. well, today president obama is set to nominate white house chief of staff jack lew as his next treasury secretary. succeeding tim geithner.

lew has been budget director in both the obama and clinton administrations. he will pray a major role of course in negotiations over the debt ceiling and potential spending cuts. the president will make his announcement at 1:30 eastern. it's an event in the east room at the white house. i have to say off the bat just because he's a forest hills guy like me that i, you know, may be a little affinity, we grew up in the same town. >> that alone could be good. >> different generation. >> maybe a technocrat is what's necessary. no one tells me this guy is acrimonious. the talks may have been. but when we're trying to figure out what to cut, maybe you just need a guy who knows his way around the budget as opposed to a federal reserve guy. i thought tim geithner did a great job, though, and i know i find myself in the minority on that, but he came to the rescue of the system in apparel husband time and i think he good a remarkable job. >> jack lew is well respected by both sides of the aisle. and also portrayed as chief

tormenter to the republicans. bob woodward in his book quoted john boehner saying jack lew said no 999,000 times out of a million and then he corrected himself 999,999 out of a million. could this be even more acrimonious. just drawing the line to the markets and the market impact it if we see more being a crow money any on capitol hill, that could mean trouble. >> i don't see him grabbing a mike which is what i want. i think one of the things that really hurt this whole process is people coming in front of a microphone saying that the talks are bad. leave it in the locker room. especially if you're looking at it as an investor. what really 457ed in the fourth quarter. owning stock, making decisions and someone would come on air and say this is a disaster, no way we could -- i just want quiet. even if it's no, no, no, i want

quiet. maybe this man, forest hills man -- >> forest hills high school, too. queen, baby. got to bring inthe hometown. probably a mets fan like me, so he has that going for him, too. but -- >> that could be no, no, no. >> obama in a tough place. could you nominate a former banker? unlikely. could you nominate a ceo? >> i thought they could do dave cody. there's a story in the "new york times" about how everyone has a vested interest. i know dave cody personally and professionally. his vested interest in anyone who read his white paper is to cut trillions out of the budget so we do not become greece. and suddenly he's got -- he's going benefit personally? there are things that happen in the paper, i'm focused on the budget issue, too, but when a guy like dave cody takes a lot of time out of honeywell, working 18 hours a day, three

hours in to the government to say listen the trillions we owe are bad. when you start going after guys like that in the press, why bother? why have anyone spend anytime? i think he would have been a great treasury secretary. he's a republican. this man is not a republican. >> most definitely not. and of course that is the question as to whether there's really going to be an impetus to actually cut spending. >> from a very liberal man. >> many would agree we need to do. >> in the clinton white house, what was he like? because clinton was remarkable in terms of -- remember, this is when we got the budget solved and our country was ascended. >> all those capital gains taxes that we had during that incredible run up, that was nice. >> that was great. we were very physical skally conservative country under bb rubin. >> we were. one can only hope or imagine or perhaps dream. >> that's why i thought, look, i think you're right, the characterization of the book, not great in terms of the

possibility that there would be a war, but the clinton period was a period where i think that what we did in this country was we did put some taxes through, we did make it so that we balanced the budget. and we did become as krepded. we would never be talking about these other countries as even being important we were so powerful. >> and even if there is a lot of acrimony, this is baked into the markets. he was leading candidate anyhow, so maybe that's doctor we have goldman sachs out saying the first quarter will be rough, but the back half of the rear will be much better because of the acrimony widely anticipated anyhow. >> i think that's right. i think that -- byron spooked me when he was on "squawk box" saying the first half will be bad. and i tried to say is tiffany the bad. but then i listened to the presentation yesterday, quite positive.

i know alcoa was not able to rally on the new, but it was quite positive. striker, quite positive. so maybe we're about to get the cascade of tiffany, maybe this is when it's about to happen and we should look out. >> let's talk about tiffany. down pre-market. saying holiday same store sales were unchanged from a year ago. below its own expectations, though. tiffany also sees earnings for the year ending january 31st at the low end of company forecasts because of what it calls uncertainty about general market conditions in all of its major markets. tiffany says it is planning sales growth conservatively for 2013 and expects earnings growth of 6% to 9%. just the latest today at that time point in a chain that started the last holiday season a year ago and some might say this is a tiffany specific story. don't have the right mix of merchandise. not doing well this silver

sales. >> how many times to we have to sit here and listen where a lot of jewelers doing incredibly well and have them hear that it's the high he said this week. the high end is so weak, why did -- >> an upgrade yesterday. >> at a certain point we have to say tiffany doesn't have the right merchandise. maybe they're the gm of jewelry. i've heard this said. >> they haven't innovated enough? they want to keep the older, but have the younger. it's a complicated business. you have to figure out the demographic. i wonder whether tiffany hasn't been left behind. >> so this glad in some way the high end is weak across the board as perhaps they would have you believe, you don't -- >> i struggle with that. >> lbmh, all of the high end brand names have been doing

quite fine and even the european stocks have been reaching record highs. it's not like they're being held back. kors is doing quite nicely. >> bmw, those are more expensive cars. i know you were talking about some car thing yesterday -- sfwlt google self driving car. in about 15 years you'll be in one. >> 1.8 million vehicles sold, up 10%. bmws are expensive driving machines. tiffany's expensive is jewelry. bmw, i think they speak to a broad audience worldwide. that is not the high end doing badly. an important number for bmw. >> let's talk about a company that is doing fairly well and that's nokia. shares up sharply. company says fourth quarter outlook for devices and service exceeds previous expectations. that's thanks to risk sales of

its new smartphone leanup. of course yesterday the stock in part was suffering because of the idea apple would compete with it at the lower end. i believe they were not scheduled to announce earnings. >> preliminary results. >> but sending the stock up sharply. looks better than anticipated. don't want to put too great a halo around this thing. >> i don't know. i read the release and they've had tremendous success with the new phone. it does make people feel maybe apple was not so foolish as to try to capture the low end which is nokia's low end smartphone. >> windows phone did quite nicely, total shipments 6.6 million, the first increase in smartphone shipments for nokia that they've seen in a year. they're saying first quarter might be troubling because seasonality issues and also the competitive environment. obviously a lot of phones coming

out at ces and across the spectrum. but let's be clear. a lot of work hard for nokia. 0% gain is not necessarily the start of a turnaround per se at this company. >> and morgan stanley, if you're thinking about buy microsoft, windows 8 disappointing. i do like to -- a lot of people call in on mad money, they want to talk about low dollar stocks. clearwire. nokia. supervalu, all big wins. typically speculation -- speculation is really bad, we have to be involved with pfizer, you know, you should be in merck. the percentage wins here are staggering and a lot of people hit it big. by the way, sirius worked out, too. >> at the same time when you have a low priced stock like that, there is a great deal of risk and i know you point that out many times.

i won't enmention many of these until they pierce that $3 level. >> but i was skeptical and this is one of those rare times where skepticism for supervalu, skepticism for clearwire because it was at a dollar not take long ago and it turns out they're a very valuable company. >> get back to nokia in a sense, spectrum extraordinarily valuable. we'll see how that situation unfolds. i think it has a lot of twists and turns to come in terms of what dish is trying to do here. perhaps forge some sort of negotiated settlement with sprints. but again spectrum so important because of the prevalence of devices like the lumia and everything else. you have to be there to compete. >> david, you have been at the forefront of people who are on tv explaining don't forget the debt side, don't forget the bonds. what i find remarkable is

supervalu, the credit side got very bad. equity side reflected the credit side and then now suddenly i would have thought the way to buy the company was the debt. >> it was. and the debt has been an incredible performer. so it is important and especially companies like this where you have $3 stock prices, you can have a much larger position so to speak on the debt side if it is very levered. >> the job cuts worked. occasionally you have to throw your hands upnd say, wow, a lot of money can be made even just picking stocks that you thought were dead. >> absolutely. up next, we'll dig deeper. yeah, you couldn't imagine we couldn't digfully dealership, did you? but we will. herballive meets with shareholders today and in a live interview, michael johnson will

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herbalife executives are holding a meeting with investors to make a case for the company and rebut accusations that it's a pyramid scheme. herbalife's president appeared on "squawk box" and explained what its company will tell shareholders today. >> what we'll hear is that big being a man's claims represent a gross distortion of the reality, that herbalife is a great company, we've been this business for 32 years. we have tremendous science based products that are high in health and safety and a tremendous business opportunity. we're proud of where we are today and confident about our future. >> after the herbalife meeting ends, michael john so thson wil appear on skauk squawk on the treat. must see tv. this story has legs. >> as an investment story, i can make an argument that perhaps we're overdoing it a bit.

but as a story, come on. the fact as of yesterday this new plot twist with dan taking on where he thought his friend, referring to him only, though, as the short seller. i thought that was a little hostile in his letter. just adds another layer of intrigue. and significant money at stake for both hedge funds. >> and herb greenberg has been on this for a very long time. michael johnson has come on my show at mod money. but he has a documentary that's fascinating. in terms of timely, i've never seen anything like it. >> it has been in the works for months. so check it out if you haven't already. called selling the dream. but in terms of twists and turns, there are also reports that carl icahn may be involved

in the name. i got the call in, but we'll see what turns out. >> fabulous interview this morning, andrew, becky, joe. and one of the things that i really wonder about, and it was brought up by andrew, they did pay off a noted but now imprisoned short seller. they did pay him $300,000 to foe away. and the president said, look, maybe that -- i had a dispute with michael saying, look, when your name is in question, it doesn't matter how much money you spend. you fight them in court, you spend millions of dollars. they paid $300,000 for a guy to go away. never. because when you do that, what that says is perhaps you're worried. it doesn't matter whether it's a nuisance. never ever back away from a fight about your reputation. >> also it's interesting to me, just to see how this is playing out. there was a day when i started certainly when hedge funds, nobody knew what they were

doing, who was behind them. these things play out in the public realm now to such an extent. not that dan loeb has come on, you're always but interesting how hedge funds have taken to a new level in terms of simple publicity. >> they come on air and bash the stock. is that okay? >> they say i like the stock, it will go to $900 a share. same exact thing. >> just in-kem wecumbent on the questioner to ask reasonable questions. >> when you sit down with herb who is the finest investigative business accounting guy i've ever seen in my life, he will tell you this could be like the not for profit schools if you're trying to figure out whether to be in herbalife. over time being they just eroded and eroded because the business model was challenged. long term, i don't want to be in the stock.

short term, it's too hard. >> well, it is the best way to get ahead of the curve on any trading day. cramer's mad dash coming up next. find out what he has to say about stocks on his radar and let's take another look at futures. it does look like an up day here on wall street with the s&p up about 8 at the open. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac,

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let's talk supervalu. important deal taking place for the company. basics are you'll get a 30% owner, $4 a share. that would be service also taking on albertson's. >> i was worried about the balance sheet and worried about the earnings. >> still a risk, but it is a refi. this is essentially a way to refi the company, take out some of the risk that you're talking about. >> if there isn't a tender at $4, does the back end trade much lower? what i'm trying to do is protect people from paying $3.50 if that turns out to be not a good price. >> people are trying it-to-figure out it-to to figur out 30% at $4. let's not forget this company tried to sell itself for quite some time. private equity overall very large. that has been the case in

private equity. there's been a multiple problem when it comes to private equity. very high multiples. not enough growth. >> is there a larger conclusion to that supermarkets are still investable. it was successful in bringing in smart people. will we see them in another form. they put themselves -- >> successful? >> not a dress for success. all right. let's talk about success for a second. ford doubled its dividend. i've been saying that al mulally stayed on in ordinary to turn it around. by the way, can i just say, that's called a reverse head and shoulders. you're probably holding up a bottle of shampoo upside down. but this is a remarkable comeback story. europe is turning around. bank of america note today about tail winds and commodities. this stock is going i think to 1

18. >> that would be a success. a keen sense for the obvious. we have the opening bell coming up. also ahead, facebook back above $30. how long will it be before the social network returns to its ipo price? remember that. opening bell and a lot most of "squawk on the street" ahead. what are you doing?

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♪ we're heading to the opening bell. we're watching also outside of equities a big move in the euro u.s. dollar up 1%, which is a huge move for the currency markets. we're also watching oil. oil also up by about a percent or so on the back of the very good china export data that came in overnight. >> nigerian barges out there with huge cargos as i'm trying to rationalize how is it that

o oil -- we're paying so much for gasoline. >> mineral exploration company based in vancouver. owner and operator of fitness clubs in the northeast. up pretty much across the board. just jumping out at me, intel, hewlett-packard and dell still stringing together pretty nice gains. hugh let hewlett-packard up. very fascinating report out yesterday, we had tony on last night on fast talking about the sum of the parts analysis. if hp breaks up or just realized to its full potential under meg whitman, $29 a share is what he's pegging some of the parts analysis at.

>> when you pronounce something dead, whether sprint versus verizon and at&t versus clearwire, what we discover is there's a resilience even to companies that we basically think don't have anything cooking. i have been very negative on hewlett-packard after i listened to tony, after i read that report, i said if you're negative on it, this is nokia at 2, research in motion at 7. stop it. you won the war. move on. there are other negative wars to fight. but not those. >> so you think that's reached some sort of a bottom. >> yes. yes, i do. this was a very considered piece saying there's real value here. so i step back and i say the

stock has down 44% last year. reasonable i think it would stabilize. >> take a look at shares of apple. 707 million subscribers in china. more than 660% of the market. we don't know what they talked about. they talked about cooperation in china and of course that's the next catalyst. a deal with china mobile to get the iphone on to that network. >> gene munster we talked to a lot about apple, he says it's not a mistake to do that low end phone. nokia would certainly make you feel like it's not a mistake.

meg ti negativity is daunting. this is just still something do we talk too much about apple. t i think it's a shame because there are so many other themes that are working. the focus is on the stock and maybe it shouldn't be. at the same time, a lot of people are just lost. they don't know why they own it. ask yourself if you own it, why do you own it. is it because of the products. because of china. have a thesis. or else you'll just -- when it's down ten, you'll blow it. >> and hopefully the thesis is not so i can get back the money i lost. that's not an investment thesis whatsoever. munster by the way, price target to 875 from 900. within of the most bullish estimates down by 25 bucks a

share. >> i see a lot of guys doing what you just talked about, i almost got back to even on my recommendation. now i'm done. railroads, coal -- >> talking about recommendations, this morning if you noticed, news corp shares up almost 2% because again analyst call. this time bernstein went toen a outperform i believe on news corp. that stock take a look, look at that move. so much for that scandal. of course the split was the key there. the key to the call in many ways has to do with the valuation of new co so to speak and a number of other businesses and what will be the fox group. >> my charitable trust owns this because of the momentum of fox group. you mentioned an analyst by name and i think it's important for people at home to recognize. not all analysts are created equally. mike nathanson is the ax.

>> he has done the work for a long time and bernstein doesn't do any banking. let's not forget that. >> that's true. >> so they actually have to rise and fall to a certain september on the validity of the research calls. it still does matter and they have people there with a lot of experience. been doing it for a long time. doesn't mean they will be right, but they do seem to be taking a shot from the right place. >> so many people got tired, maybe they got old, sorry, and we were talking about jack lew. you said to me he was born in 1955. so was i, partner. like i'm so old i cooperauldn't treasury second. >> what i would give for seeing you in the oval office just coming in there one morning. >> would you like that? i would love that. i had a can of diet coke with president clinton. some people will say it's the

$100,000 diet coke. >> is that all it cost? no lincoln bedroom? >> when i saw that lincoln bed that they all got and i got the diet coke, he was like how much is the lincoln bedroom? diet coke was expensive. >> apparently more than $100,000. >> tiffany shares are down. coming this with another disappointment for the holiday season. relative weakness in north america. but strength in asia. we're also watching other retailers that had sales out. as comparable sales, more promotion promotional, had trouble. >> usually so robust. this time talking about missing the market. that he didn't necessarily have the right merchandise. >> this is dress barn by the way.

>> dress barn. some people call him maurice. >> i'm still trying to find the note here. woo-woo! how is that? >> i do think that this is a company that's made acquisition after acquisition and now it's being called in to question this multiple stream. i liken to you are about an our. they just failed to execute. >> urban high in today's session, same store sales up 9%. >> it's funny, people always think of urban outfitters those -- have you been to an anthropology? it's a loved play among higher end teenagers. and urban inside he left --

really good analyst, but -- >> we want to go to eamon javers who has breaking news on walmart. >> a lot of confusion about this this walmart meeting here in washington. new detail for you. i'm told that walmart in fact will not be participating in meetings with vice president joe biden at the white house today. instead, what walmart is doing is attending a meeting with attorney general eric holder that will be held over at the eisenhower executive office building. that's technically part of the white house complex, but a separate building entirely. and i'm told that the vice president will not be scheduled to attend that meeting. so the vice president has three gun related and violence related meetings today including a meeting at 6:00 p.m. this evening with entertainment industry leaders. but walmart will not be attending those. instead a separate meeting with attorney general eric holder. lots of confusion around this one, so wanted to clear that up as best we can. >> thank you very much, eamon javers. we are watching the gun stocks

today. a california state teachers retirement plan will divest itself from the stocks. the point was made when they decided to divest itself of tobacco stocks, this took place over years. but still see something pain in the gun stocks. ruger down by 1.5%. smith and wesson down about 1%. >> how important are guns to walmart? >> i don't know specifically. it's one of many product offerings they have. but, yes, they're the largest gun seller in the country. but then again, they are the largest seller of many, many, many, many things. >> if you want to do something against guns, you're doing something against walmart. >> or you might say something against dick's or cabela's. >> percentage of overall sale, i

don't know how compare to some of the other retailers we mentioned. >> i went to law school, i don't practice law, second amendment was always derided saying listen, that's just for militia, that's not the right to bear arms. here 33 years later, the second amendment is widely held as being the reason why you're allowed to bear arms. so i think this is going to be executive branch versus constitution. interesting to see. bob pisani is here on the floor with what's moving this morning. >> happy thursday. did you see the china numbers? getting better. really good. 14.1% increase in exports. we were expecting 5%. imports were up 6%. this is really going to help the gcht dp numbers in china. and it matters a lot. have to get over the 8%. so what was it last quarter? i think it was 7.4%. these numbers are really going to help the q4 numbers. where he could get up at 7.8, 7.9. getting close to 8%. that will help the global

economy. on the earnings front, it's a little early. i know you're worried about tiffany's andaeropostale, but a lot of companies have made general positive observations. costco, nike, alcoa in line but bullish commentary on china. helped multinational companies. so so far the numbers aren't that bad. i know the question for me that i don't have an answer for yet is are the ceos anymore optimistic that some parts of the fiscal cliff will be resolved. sitting on all this cash, will they deploy anymore capital in 2013 than they did in 2012. that's kind of what i don't have an answer for right now. yes some are lowering some of their estimates. but i don't see them lowering it as much as they were lowering it in the third quarter. i still maintain earnings trough was in the third quarter. i'll keep an eye on that. remember of it annie rallied when significant net reported better than holiday expected

sales. now $500 achd less. maybe taking market share away from tiffanys. finally i want to point out an interesting story on stock exchange bass coming out and reporting that they had been overcharging some of their members for certain orders not properly executed. what's interesting about this is it's been occurring for over a four year period from 2008 to 2012. the overcharge wasn't huge. $420,000. but i just got off the phone with joe, runs it, i said, joe, how could this go on for four years and nobody actually noticed it. his abc was that it's incredibly complex these systems and that these orders stay on the books for literally micro seconds and it's very hard to detect. overall he said -- i asked how many orders they filled. 10.6 billion orders have been executed in the last four years. how much were wrong. 400,000. so that's like 0.004%. so a small number. still, my opinion, another the bit of a black eye for the big

automatic execution trade business. back to you. >> before we get to rick, just want to correct, we do like nathanson, but we have to locate him at the right firm. >> my memory fails me. he moved to morris some time ago go. bernstein did upgrade shares of news corp but i was incorrect. i was wondering, i thought i saw something from him earlier this week. so my apologies to both. the basics are correct. bernstein an upgrade to outperform help to go accepted the shares higher. however the analyst i mentioned is not at that firm. let's head to the bond pits. >> everything moving in every sector. exciting day. bob pisani talked about one of the dynamics, china, one of the important cylinders in the engine. speed of the car of course is the global economy. and the faster it goes, all

things being equal, higher interest rates. that is true. up about three basis points. approaching that and half touched 190. remember, the high close for the year so far is 191. even though intra day since the move began we came within a basis point of 2%. look at one month chart. this is definitely a fifth wave according to many. we want to see how high it takes yields, low it takes prices. if we look at the euro and think mario draghi, you can see the 24 hour chart. flirting with 132. high water mark on the recent move. but now look at the dax. up about half of 1%. everybody saying it's because he's kind of talking about recovery. i looked at their unemployment data. he's not convincing me. i think the markets are uniform in one thing. if you keep giving gifts, stocks keep going up. he said he's not worried about the exit. enough said. now let's switch gears a bit to

another fx market. look at this chart going back to july of 2010. the dollar-yen once again on fire ain the dollar's favor. could be a fresh 29 1/2 month high on the side of the dollar. jim krcramer, it's all yours. >> let's check out the latest moves in energy and metals. sharon. >> definitely about china when you're talking about most of the commodities an the momentum that we're seeing in the commodities sector today. we are looking at oil prices broken out above 94% a barrel for the wti contract and that is significant. the fact that we did see from china december oil imports up 8% and year over year we're seeing a rise of nearly 7%. that's what traders are looking at. but also saying wti is a bit overbought here. less momentum in the brent crude contract.

metals, it is palladium and platinum once again help to go le helping to extend the gains based on what we're getting out of china. and gold and silver, they hit session highs after the e echle commentary. copper not as much of a gainer. momentum tapered off at the end of the year. melissa, back to you. coming up, kick starting a smart watch. pebbles version is launching later this month. also ahead, herbalife fights back after michael johnson finishes addressing shareholders, he'll appear on "squawk on the street." take a look at this morning's early movers on this thursday on wall street.

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[ both ] the internet. oh look. here comes my date. i met him on the internet. he's a french model. uh, bonjour. [ male announcer ] state farm. more mobile than ever. get to a better state. rise and shine. thanks for waking with cnbc. i'm jim cramer and there's always a bull market somewhere.

get up and make your best move. >> there's a big reason why cramer is giving you a wake-up call this morning. it's an exciting day. we're launching our alarm clock app. i would like to wake up to that. it would be very motivational. >> it would wake you up. >> it would get me out of bed immediately. >> anybody else who has woke unup to that hasn't been too crazy. >> hi, there, i'm david faber. thank you for wake up with cnbc. no matter what market you're in, make the most of it and have a fantastic button. >> that's the snooze button. >> trying to get people to feel good. have a fantastic day. >> did you wink while you said that? >> or roll over and go back to sleep. really. whatever you want. >> your alarm is kind of that -- >> i think maybe they start with me and then go to you as the

next one. you're the follow-up. >> we all have one by the way, so you can pick your favorite cnbc personality, change them up as much as you want, but all available for free at cnbc.com. >> it's exciting. people love this stuff. it is funny. we did all these -- they're very funny. if you love what we do, you want to wake up with us. >> why not. coming up, giving kids middle class values while raising them rich. we'll explore the paradox of being a millionaire participants. but first -- coming up, larunching into market like this can be tough, but jim cramer and six stocks in 60 seconds. he may give you the list you're looking for when "squawk on the street" returns. and i'm here to tell homeowners that are 62 and older about a great way to live a better retirement. it's called a reverse mortgage.

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simon hobbs has a look at what's coming up in the next hour. >> we'll hear the case as to why

if you invest now in tiffany, could you make a 25% return. we'lls look at research in motion and nokia and latest on the blow by blow attempts to steal hearts and minds of herbalife. >> a good documentary on vietnam. six in 60. p. >> okay. is there ever a day when someone doesn't come out and say i love amazon? >> three months, 9%. when do i start to get -- >> when it goes to 140 times earnings instead of 77 times. i'll wake you up and play the app. >> let's move on to delta. >> gold man loves it. the planes are packed. fuel costs are down. this group is working. i can't believe it. >> new world for the airlines? >> hope springs eternal. >> chk.

>> battleground sun trust takes it. jpmorgan goes from sell to buy. natural gas, it's too warm out there. >> ntap. better than expected. >> this is a company a lot of people feel they'll miss the quarter. it's big hardware for data. >> dunkin. >> they downgraded it. nothing wrong with dunkin. i'm a buyer. >> and neutral to buy. >> it makes me think i'm going to ask is there a lot of chatter about m&a, mergers. i always want to know. >> a little more chatter. the end of the year, we had more activities than we might have anticipated. seems to be moving. we'll see. >> goldman up saying the m&a market could heat up. they put out a list of m&a targets. i don't know. interesting. >> it is interesting. also worth noting, what's coming up tonight? >> athena health care.

this is health care records. why? because we have to get medicare under control. we have to figure out who is doing the good and who is doing the bad. i think this man is doing the right thing, trying to cut the costs in the health care system is what everybody has to be focused on. >> mad money, 6:00 and 11:00. herbalife ceo coming up. got to stay tuned for that. and a bit later in the show, that analyst meeting going on right now. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac.

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welcome back. we have november wholesale inventories and sales out. we're expecting a small gain. we received triple what we expected. up 0.6%. however, there's always a but. last month originally released -- this month released up 0.6% split in half. sales figures up 2.3, but also revision last month, now to down 0.9%. so of course we'll continue to look at this data along with many others today. but maybe the biggest driving force is just global equities in

response to some of the comments by mario draghi. >> let's get to the road map for the next hour. another disappointment in a high end tiffany out with weaker holiday sales. how much of a read through is tiffany for the broader retail trade? >> plus jack lew set to be nominated as treasury chief by the obama administration. so what does the new appointment by all accounts a bruiser mean for investors? >> and the battle over herbalife rages on with two high profile activists on two very different sides of the company. we'll take you live to the investor meets as they aim to fight back against the controversy. >> but first back to changing of the guard for the obama administration. the president will nominate jack lew to succeed tim geithner. steve liesman joins us now.

he has a look at exactly what lew will be left with once mr. geithner leaves town. >> no easier job now. treasury sect job was a tough job to begin with and today's circumstances, this post financial crisis world, a tougher job yet. let's go through some of the things that we know and some things we don't know. the debt ceiling and more among the jobs here, negotiate a debt ceiling and sequester deal with congress, or if you don't do that figure out thousand run the government without debt. an interesting job. also on that agenda, fixing long term entitlements. as well as the broader thing which geithner has been working on, but hasn't really pulled the trigger on, corporate and individual tax reform. let's broaden it out because there's a local other area especially in the wake of the financial crisis. the global finance job.

who is the treasury secretary? he's the guy you need to stand up during the next meltdown. second thing, dodd-frank remains out there, unfinished regulations. basil 3. fannie mae and freddie mac as well as more on too big to fail. that's some of the new stuff. how about the old stuff in not an easy job either. he's the main spokesman for the greenback. he will negotiate with china and other partners, as well. and then he's the representative when it comes to the g-20, the imf, world bank and of course what about that other thing, he is the liaison with the business community. if we take a wider view, clearly lew's expertise is right here. he'll have to get up to speed on these issues especially when it comes to financial regulation. he did spend some time at citigroup. and over here, you either grow into this job or you don't. figure out how to talk to the market about the dollar or you mess it up.

and simon, you've been doing this almost probably as long as i have and you know every treasury secretary comes to that test on speaking about the dollar, they tend to fail it it the first time, but then get it right for the rest of the tenure. >> for as long as 20 years they've been talking about a strong dollar policy. let me ask you the central question. can we get through and solve the debt ceiling. does the appointment of lew make that more difficult. because this guy is a bruiser. he doesn't get on with republicans. this is potentially very bad news short term for financial markets, isn't? >> i think that is not so much reflective of jack lew as the president's feeling. if the president wants to put a person up there who can make a deal, can he can do that. so, yeah, you have jack lew who is a whiz on the numbers. i've had a chance to talk to him. and he'll run circles around you on the budget. but you're right that john boehner has complained about how

tough jack lew has been this negotiations. but that reflects president's stab point on these negotiations. so i think investors should be braced for a bruising battle no matter who is in charge of that. itso i think investors should b braced for a bruising battle no matter who is in charge of that. it. >> steve liesman, thank you very much. normal announcement at 1:30 this afternoon. by now you've already seen the signature of jack lew. in this case scribbling circles. here is your chance to weigh in on our twitter question. pretend you're a handwriting analyst and tell us what does jack lew's signature say about how he will do as treasury secretary. tweet us @squawkstreet, we'll air your responses throughout the morning. now to a big stock mover. shares of tiffany taking a hit. brian nagel, good to speak with

you. >> thanks for having me on. >> you're sticking by tiffany, but this has been several quarters now of disappointment. at what point -- do you see any sort of catalyst on the horizon in at what point do you expect the turn around to happen? >> it's another disappointment. holiday sales were weaker than we had hoped for. and that's why the stock is down today. what and i have been telling my clients all day and our oppenheimer sales team, cut through the noise and i think there's a number of positives on the horizon as we look at 2013. these include easier sales comparisons, input costs. probably more importantly, my view of the world, things are getting better for tiffany. >> that's what stuck out at me. luxury demand is picking up and tiffany seems to be most of concentrated on revamping its product. but mr. terms of luxury demand,

so many other data points that indicated that luxury demand has held up fairly well. >> bmw sales have been quite good in china specifically. why is there not the same support carry through to tiffany at these other luxury brands can do well? >> that overall, the case you laid out really gives me continuing encouragement. my view, i think tiffany is suffering through a fashion miss. i think difference an any becoming more aware of this. it's a fixable problem. but then you you have a backdrop where there's a decent amount of command. so i think you'll see sales improve rather quickly.

>> what are they doing to fix the fashion issue? do we know that there is a new design person coming on staff. >> i think it's important that they did extend that because that takes away potential distractions from the company. but difference an in he it seems like they're much more focused on designing new products from within. which is fine. what i'm encouraged with is the conversation i've had with tiffany over the past few months is that they're really now recognizing that there is an issue. they need to do something to pump life into the lower end business. and that's different than maybe a year ago where i don't think they were aggressively recognizing there was an issue.

>> bling is not in. and if you look at most women, there are not so many weddings happening, but more forntsly, they seem to be more focused on shoes and bags and leather goods. >> that's a great point and i would take the conversation one step further to say that i think to a certain extent julie loses out to consumer electronics. i think again to a certain extent, some of the new products of apple and other consumer electronics s neverers squeezet sales of tiffany. >> and yet your price target represents 25% up side. >> i recognize all the issues with tiffany. the point i'm making is that the price of stock. i look at the stock going $58, $59. basically at a valuation bottom. kind of at the low end of its

trading range. so it's poised to bounce pretty nicely. >> brian, we'll leave it there. thanks for your time. >> thanks for having me on. >> one thing for sure, the herbalife soap opera is accelerating. so what does herbalife ceo has to say about the controversy? he's addressing analysts and then he'll address will show first on cnbc. plus the great paradox of wealthy parenting. how can parents give their kids middle class values while growing up with wealth? it's a high class problem we'll explore after the break. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want.

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herbalife in the crossfire. two hedge fund titans clashing over the company. dan leob is long the stock and being a sman short. herb greenberg is here to explain why the drama is far from over. >> you know, herbalife's presentation is currently ongoing in new york. i'm listening to it here at my desk. but we have some comment from the security and exchange commission regarding its inquiry into herbalife. enforcement chief told us we can't comment on matters that may or may not be under investigation. of course we expect that. multi-level marketing kinds of scams are not unfamiliar to the enforcement division and it raises a number of concerns and we've pursued cases in this space. now, as we pioint out in our

documentary selling the american dream, multi-level marketers remain a mystery to most americans. p pyramid scheme alert says his analysis suggest distributors lose $10 billion a year. >> very few people understand the math. it's simple math. but it's elusive. >> what is the math? >> almost all of these schemes tell you that you can make money by just recruiting three or four, five let's say, five, and then you let the five do their five. that gives 25u. what they don't show you is that you could only do that 13 cycles. and you would exceed the population of the earth. so it can't work. >> you're telling me that 99% of the people who sign up to participate never -- >> never earn a net profit. they lose money. >> over what period of time? >> in one year. >> i sat down with michael

johnson, ceo, and as you might guess, he strongly disagrees with fitzpatrick's analysis. >> this is a company that is built on individuals who get a great product, who if they work hard succeed in the business opportunity. that we have a set of ethics and integrity that's unmatched in this have i. we're more transparent than minute in this industry. >> johnson has not yet really given his side of the presentation. others at the company can currently going through step by step trying to go against the accusations. we'll keep on the story as the day goes on. >> thanks very much, herb. of course a great documentary. for more on the herbalife story, let's bring in kate kelly at the analyst meeting. of course herb greenberg also staying with us. what do we know so far? >> david, a fairly large crowd here today at the four seasons in new york. i saw roughly 100 investors in

the room shortly before the presentation started. at capacity there is 130 and they were oversubscribed from what i know. i definitely saw folks from third point and barclays. i understand bill ackman himself and carl icahn are not here. they're both out of town today from new york but they doesn't mean they don't have representatives here. so a lot of back and forth between herbalife and pershing square as looet in terms of responding to what being a man said in his december 20th presentation. they feel he has miscast their price competitiveness, that the unit of measurement he was using was 200 calories rather than per unit per serving and they say by the latter measure which will is who are of the industry standard, their pricing is far more competitive. that's just one of a number of things that they tried to dispute. but the bigger point that i've come away with so far is the fact that they're really touting their products, touting the quality, the science behind them, the popularity of them, even among former distribute tors who no longer sell the things to outside customers.

and it's interesting. almost like a retail appeal to an institutional audience. there's not been so far a whole lot of time on accounting, business model, these accusations of a pyramid scheme and why they're wrong. the substance of it really has been sort of product promotion. >> and kate, critical to all of this is the issue of recruitment versus sales. how much of the compensation for the distributors comes from one versus the other. and i think what's going to be interesting to see if they really tackle the issue that michael johnson said to you on our air several weeks ago, that 90% of the sales come from outside of the network. there is a little discussion today, mresearch for them, but that number stopped me in my tracks. >> absolutely. and that's something i think investors and we will be looking for more information on today. so far i haven't heard a terribly robust discussion of that point, though. >> they're going to try to go through point by point. some little hints of stuff but

nothing significant. >> what worries me, at the end of the day, what the company is trying to to is bring the focus back to whatever is fair value for the business. my question, the journal is suggesting this could be the bloodiest hedge fund battle ever. my concern is for a company that has a $4 billion market capitalization, the degree to which efficient market theory will take it back to where it should be given daniel loeb 350 lil million on the plus side, in that storm, does the fair value of the business have a chance? >> that's a great question, simon. and this stock has been on an absolute roller coaster ride. up 48% since its lows toward the end of the year. the mere news that bill ackman was so short the stock took it far down. one thing i did take a look at was short interest levels have spiked since the being a man short was made public by us on december 19th. levels right then were are around 19% of the stock. now they're more like 24%.

keep in mind this is probably a low number because the nyse reports these on a lagging basis and also for technical reasons it tends to be lower than the market reality. so let's just say ballpark terms the short interest could be something like 30%. but we do have very powerful voices on the long side, as well. dan loeb is now the second biggest holder of herbalife with more than 8% and of course we have rumors of carl icahn in there. we've called for comment. we're waiting for hear something from his office. but no word yet. >> of course this was an interesting story to begin with, but i foind yesterday's emerging battle between mr. loeb and mr. ackman particularly dramatic. when you look at the years they've had, and i think we have some things to show, loeb had a better year, but both had a pretty good year in 2012. owner of greek debt of course at the bottom. that was a great call.

the yahoo! position has worked out well. pershing square, pretty good numbers there, as well. my producer, danielle, crunched a lot of numbers in terms of looking at important trade that ackman made that did not go particularly well, to sell citi and by p&g, very large position again for his $11 billion fund. -- >> can i get in here for a second? i want to make one interesting point. when i met with michael johnson, he asked me about einhorn. and i said i've never seen anything quite like that with the stock following after asking the question on the conference call. and i said what do you think? he said i think that shows hedge fund manipulation. i'm wondering now what he thinks when you have the hedge funds actually coming out in his favor and getting behind each other supporting the stock. >> yeah, it's interesting, herb, we were talking earlier just about this in some ways a new world we're in in terms of hedge funds being so vocal on both

sides whether or not this they come on with us, but certainly through their written words that get circulated so quickly these days. >> and the point about loeb's position to be made is it's a passive position and he could be selling his shares today for all we know. and he won't have to reveal that sale until the next quarterly filing. >> that's absolutely fair. and to david's point, both ackman and loeb has done well of late but loeb has been killing it. he recently sort of dusted off his activist shirt after about five years i believe of not being terribly active with stocks, but he obviously had a big win with yahoo! he's made other bold bets. so what he's doing no matter what the stock will be interesting. einhorn for what it's worth has studiously avoided the limelight ever since i believe it was the second quarter of last year that he participated in an herbalife earnings call and his mere presence and sharp questioning

drove it down by a big chunk. but at the same time, he has not said whether or not he's short. the indications based on that call would suggest that he's short, but we didn't know that. we don't know if he's here today. i've asked the question. i did not see hill. but that doesn't mean he didn't come in on the late side. so a lot of interesting institutional presence. s retail point is interesting, too. underprivilege onlied folks might be getting manipulated and hashle life saying it's offensive to hispanics and others and it's part of the american dream to make a good living and to get healthy, as well. >> a battle so so many fronts. herb, i want to give you the last word. the point i was making simply when it dealt with ackman is he would have been befr off on keeping citi as opposed to moving in to p&g. but herb, you get the last word. >> i spent ten months looking in to this. i think his presentation is very

interesting. the documentation i have selling the american dream is appearing right now on cnbc.com with a bunch of kecontent that i think will help explain some of the controversy. >> herb, thanks so much. and our thanks as well to kate kelly. let's get a market flash here. mary thompson's at headquarters with news on morgan stanley. >> that's right. we'll keep with the third point theme. dan loeb saying he did initiate a position in morgan stanley in the fourth quarter. shares up over 4% on the news. the reason loeb likes it, he likes the positive impacts, he expects a restructuring on the stock. he says given it's trading at a 20% discount to tangible book, it is basically a free call option on a potential restructuring. however, he did note he is concerned about some of the directors at who are began stanley. he would like the investment bank to start the restructuring at the top, meaning the board of directors. that means possibly we could see

him take action or take a position to get some of those directors out of their seats. we'll have on wait ato wait and. >> leob got involved in yahoo! and now hearing more from him. we pointed out many time's ubs's decision to move more focused in to wealth management. and the positive reaction it got from shareholders. one wonders whether that is similar pressure down the road for morgan stanley. still ahead, a smart watch getting set to ship off this month. the company ceo will give us an inside look. about insurance.you smar

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rise and shine and thanks for waking up with cnbc.

i'm simon hobbs and it's go, go, go time. get up and make your best move. >> that's my new favorite i think. quite the way to start your day as you just heard will, cnbc is launching our very own alarm clock app today. i think we have another one here to listen to, as well. do we? >> thanks for waking up with cnbc. this is melissa lee. whether you're working or playing today, make sure you're prepared. check in with us. it's okay to hit that snooze button, but don't make it a habit. >> wow. so nice. >> i gave permission for the snooze button, though, right? >> of all the people, who would you most like like to wake up with with this app? >> i like how you said wake up with with this app. >> i thought i'd add that quickly. >> well, with you, simon. i like the go, go, go time. because that's the way i feel when i wake up in the morning. it's go, go, go time.

instilling middle class values in to wealthy children. apparently it's a tough task. robert frank is here to run through the paradox of rich parenting today. oh, the troubles we face. >> yes, it is a high class problem. but an interesting one. when they ask the wealthy about their most important goal, it's not making more money or paying less taxes. it's raising normal kids. and that's not an easy task. a new survey those 80% of american millionaires say raising hard working independent children is their top concern in life. 60% said their kids should create their own wealth. these millionaires of course grew up middle class and want the same values for their own kids. more than three quarters of today's millionaires said they grew up in, quote, average financial situations. the trouble is that their kids are being raised very differently. while rich parents want their kids to create their own wealth, they're also giving their kids large wealth.

60% are leaving their kids substantial forces and half are giving them more than a half million dollars. the number is clearly larger than that for many of these folks. and then there are of course the clothes, the cars, the trips, expensive vacations and all the other luxuries that many of today's wealthy give their kids because they can't help it. raising middle class kids in a very upper class life time as if prntsing aren't already hard enough. >> i don't know. this whole idea of middle class values, i feel like they're just values. values that any human being would have, the value of working hard to earn a dollar. the value of -- all of these things. if they transcend. >> we have to turn into a culture that worships the middle class. we call them middle class values because they are distinctly an september for wh an september for what happened for the wealthy. very hard to be motivated when you can get whatever you want.s

the wealthy. very hard to be motivated when you can get whatever you want. >> just dochts give tn't give t whatever you want. >> does your heart really bleed for these people? isn't it more difficult to raise kids with less money? >> it's a different set of problems. i won't say one parent has it harder. raising kids under any circumstances is tough. it's just a different set of problems. i look at the wealthy from a soesh logical perspective. and the biggest growth industry right now is this problem where people are trying to educate wealthy kids on how to be normal. so what the parents have done are hire other people to teach their kids about financial values. >> an airplane that other people are on with you. >> it's called coach. and seats are smaller. >> i love having this conversation with a lot of my very wealthy friends because it's interesting. and i love saying what are going to do with the money, are you really going to leave to them? >> and again we shouldn't be

feel for them, but if we want to understand the wealthy, this is the issue that they talk about, think about, worry about, more than anything else. >> when they change the tax rules at the beginning of of the year so they've stuck them all with $5 million for fear that it would go down to $1 million, so they've actually set up the trust funds the last few months for them. so these kids are now richer. >> a lot of people that $10 million exemption caused many of the wealthy to write $10 million checks for their kids because they thought we'll never get that tax chance again. and now they're sorry they did. >> i thought it was five. >> 10 per couple. >> always good to see you, robert. breaking news. natural gas inventories are just out. >> we're looking at a rebound here and that has a lot to do with the inventory data that just came out. a much bigger than expected withdrawal from storage in the last week due to the very cold temperatures that we had. we knew it was going to be

bigger than normal. most analysts had anticipated that it would be larger than the five year average, larger than a year ago, but this is at the upper end of the range of analysts expectations and much greater than the con censse con. what we're looking at now is a rally or slight rebound that we're seeing in natural gas to 3.20 the high so far. traders saying perhaps natural gas will get up to that level, but then that's the time to sell. still above normal temperatures. weather forecasts are very bearish. and that's what traders say is likely to cause this rebound that we're seeing in natural gas prices to he said perhaps rather quickly. back to you. >> thank you very much. have a great morning. still ahead on cnbc, a mysterious event organized by facebook for next tuesday raising lot of speculation and maybe helping shares back up above $30. p if the announcement

disappoints, investors, could the facebook rally be over or will it get back to the ipo price. ♪ [ male announcer ] some day, your life will flash before your eyes. make it worth watching. introducing the 2013 lexus ls. an entirely new pursuit.

with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com.

best performing stock this morning. >> take a look at shares of baidu. jeffries cut its price target writing that near term challenges persist.

however the research did highlight long term bullish trends and that according to management baidu search is pre-installed in 80% of brand android phones. default search engine in china. and that baidu in the long term is strongly positioned in the online travel and video ad vertical. so perhaps those bullish comments helping shares of baidu outperform in today's trade. back to you. >> thank you very much. big story today, walmart the nation's largest gun retailer heading finally to washington. the big box retailer meeting with attorney general eric holder about gun control later today. our own eamon javers joins us from d.c. a number of areas of interest here. i guess the first is that it's not actually a meeting with vice president biden after all the doing and froing. >> yesterday there was a lot of confusion about the walmart meeting it. initially walmart said it was not going to send anybody.

and then walmart confirmed that they would take part in the biden-led talks taking place here in the white house complex. what we learned this morning is they're not actually scheduled to meet with vice president biden himself. instead walmart will be taking part in a meeting at 3:45 this afternoon with the attorney general eric holder. always possible of course because the executive office building where that meeting will take place is right nest to the white house where i'm standing, always possible vice president biden could just drop by that meeting unofficially, but he's not actually scheduled as of right now to meet with walmart and it's a big day here in terms of guns and violence in the country. the vice president will start off the day at 11:45 with a meeting. he's also got another meeting at 1:30 this afternoon. that will include representatives from the nra. and at 6:00 this evening, the vice president is going to be meeting with representatives from the entertainment industry as well to talk about violence in the culture. we also just recently got a list here of some of the firms that

will be in that meeting with walmart. a lot of gun retailers also taking part in that meeting. and let me read you some of the names of those firms that will be participating in that meeting including cabela's, which is a sporting goods store, academy sports, bass pro shops, big five sporting goods, dick's sporting goods, dunn sports, gander mountain, sport man's warehouse and walmart all taking part in that meeting with the attorney general eric holder this afternoon. so a lot going on. a lot of moving parts. not clear what will emerge from this except for the fact that the vice president said yesterday that there could be some executive orders as part of this as well as legislation up on capitol hill. >> and i'm trying to work out what this means for the walmart business. on the one hand i read that over the last two years, the number of walmart stores carrying guns in response to the downturn in retail increase from about a third to a half. so guns are good it for walmart. but on the other hand, if they

close this loophole where private gun sales don't need to be vetted, you don't need to go through the usual checks, presumably that would benefit walmart potentially as the largest gun retailer. what is the intersection here of business and politics? >> well, it's clear there's a lot on the line here for walmart and we know that walmart has about more than 1,000 stores that do sell guns. the question is how is all this legislation and executive orders going to shape up in a way that it impacts walmart's business and just put your finger on it, it's not clear right now how that will shake out. >> okay. aim monday j aim mond and i monday jabbers in washington. mgm down after the okay to open a second came see though. we have conflicting notes coming out of the research world. kn nomura lowered its tries target

to $12. the recent being the recent run up in the stock since mid november, up just about 40% since that time. risk/reward outlook does not look positive. if you're patient, 18 to 24 months out, we could see the stock in the mid teens, but right now they are at a neutral on this stock. and again as you can see, down 3.6%. david, back to you. coming up, dan niles was shorts shares of facebook back in may. now he says the stock is his number one pick from 2013. why the change of heart? he'll explain next. s if ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge,

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. welcome back to "squawk on the street." amazon out with news this morning that aims to shake up the digital music business. it's launching a service called auto rip. buy a cd from amazon and the company automatically adds mp3 versions to your player. it applies to 50,000 auto rip cds, but that library claws all the biggest titles from michael jackson to maroon 5 to adelle. and here is the best part. it applies to cds sitting on your shelf that you bought from amazon in the past 15 years. so if you bought a cd of thriller back in 1998, you'll

1 r their gift program, facebook gifts. and we think that will maybe do $10 million to $20 million in the concord. they have less than a month to monetize it at all. but if you look forward in time, it's easy to see how you're on your facebook time line, comes up that your mom's got a birthday coming up or anniversary, and right under that picture there's a little box for a gift, you click that and immediately you can send her a gift in one of the stores that facebook is associated with. 1-800-flowers, brookstone, even itunes. and they will 00 gget like 10% the revenue. >> you had no faith that facebook would monetize to now believing in the future. how long do you normally hold the stock for? because you seem to be living very much in the moment. because at the ipo, could you have said this is a huge platform, this is a huge future once they learn to monetize it, but you chose not to then. now a complete u turn. >> but you have to remember the company went through a complete u turn. so when they went public, mark zuckerberg published called the hacker away, and if you were reading that, you knew there was

going to be a problem but there's a line that says simply put, we don't build services to make money. we make money to build better services. if you're being told by all your bankers and analysts that you're the best thing since sliced bread and don't worry about making money and just worry about your mission for connecting people, that sounds great. when your stock gets cut in half and your employees and shareholders run happy, then you go we need to start thinking about how to really moptize this user base which they hpt really focused on in a big way. and so it's the evolution of a company. and it's a great tribute to facebook that they really started to think about that. and there's other things, as well. instragram, they're starting to focus on how do we monetize that. what i'm waiting for is when dough this get into search.

ever like with apple the search business. much like the iphone and ipad, et cetera, i think you can see the same thing with facebook over a number of years. >> dan, thanks for your time. >> we have some breaking news on walmart in mexico. >> eliza cummings has sent a letter to walmart saying they have uncovered a document saying michael duke knew as early as 2005 about the bribery allegations and it says you and other officials were personally informed about these bribery allegations on multiple occasions and it would be a serious matter if the ceo of one of our nation's largest company failed to address allegations of a bribery scheme. we're going to read through this right now, there's a lot of documents here, and get back to

you. this has raised the stakes in the walmart situation in mexico. there's the stock there. the stock hasn't reacted all that much since the news broke by the "new york times" back in april. >> one thing for sure, everybody seems to be piling in on herbal life. still ahead, the ceo michael johnson will speak about the controversy that now envelopes his company. it's an interview you won't want to miss. >> coming up -- ♪ who's that guy, where did he come from ♪ >> that's rick santelli. ♪ i never knew anyone could be so cool ♪ >> they don't get much cooler. and he'll be joining us after this break. ♪

. welcome back to the second hour of "squawk on the street." it's time for the santelli list. there one hits close to home, right smack in the middle of home. we're going to be talking about chicago, illinois. ever heard of sb 3144?

not many have. it's the precious metal purchasing act. granted it was passed in the illinois house in the spring of last year and it's been moth balled -- i'm sorry, in the senate. it's been moth balled in the house pending some amendments. but basically the long and short of it is is they want an audit trail to any precious metals, whether you're talking coins or bullion and they want the retailer to do the work. but the point of this is why would they need an audit trail? the easy question is revenues but there's all so much more. i would say 90% of my e-mails sometimes are from the gold bugs and god love them but there are a lot of conspiracy theories and you can understand. just look at the history of gold. we executive order number 6102. if i give you a minute 1933, you'll understand, that's fdr with the gold confiscation. they didn't prosecute many people, though. but this one is getting a lot of

attention. and also there's another issue here. think i'm not crook, think richard nixon 1971. bye-bye bretton woods. bretton woods i believe was in 1944 and it established a monetary system based on gold. i'm oversimplifying. the reason it's important, '71 it went bye-bye. it cleared the way to create currency futures. at least that was one of the bright sides. what does all this have in common? a role model cab good thin be ag from a bad thing. think about the reformed criminal who is go to high school and talk about drugs. illinois is the murder capital of the world unfortunately. the final was 500, new york was 414 and they have three times the population, known as the city with the toughest gun control to be the murder capital as well. but the point of this is there

are lessons to be learned even if you are not winning the race, sometimes you're losing it, something to pay attention to, especially if you have a basement full of unaudited gold! back to you, david. >> we have much more "squawk on the street" coming up next. [ male announcer ] staples is the number-one office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink.

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let's check what's coming up at 5 eastern here on cnbc. >> more on the herbalife saga. a china hard landing. what they are forecasting in terms of what this means for demand in metals, et cetera. >> interesting. interesting. >> all right. well, let's get to it. here's what you might have missed if you're just tuning in. welcome to hour three of "squawk on the street." here's what's happening so far. >> we are absolutely committed and we have data to validate that the vast majority of revenue of sales comes not from recruiting wars but from the sale and consumption of products. that's absolutely critical.

>> just because people are unhappy nobody got prosecuted in the financial crisis, they shouldn't take it out on shareholders, particularly shareholders who were not driving the bus at the scene of the accident. >> this is a very complicated business of which you literally are to try to figure out the demographic. i wonder whether tiffany hasn't been left behind. people are worried about nokia and the balance sheet but the job cuts worked. look, i just -- occasionally you have to throw your hands up and say a lot of money can be made even just picking some stocks that you thought were dead. >> they're funny and if you love what we do, you want to wake up with us. >> yeah, why not. >> why not. >> okay. >> a look at some of your lower end product, which is still high priced and i don't think it's keeping up from a fashion standpoint with some of the up-and-coming jewelry brands.

>> good thursday morning. live here at post nine of the new york stock exchange. let's get a check on the markets which have been slowly losing their gains as the morning has progressed. the dow up about points, s&p about a point and a half, the nasdaq down just slightly. nokia soaring as fourth quarter results came in better than expected. nokia also seeing better than expected results at sights siemens networks. and tiffany says holiday sales came in at the low eastbound of exp -- end of guidance. >> white house chief of staff lew to be nominated for secretary of treasury. plus some big moves in retail

from luxury stores like tiffany to teen retailers, it is not a pretty picture. we'll break down the numbers and tell you if it's time to stay clear of these stocks. and find out how you should be playing facebook ahead of the big reveal. and the battle lines are drawn over aesh life. ceo michael johnson will join us live at 11:45 a.m. >> the federal reserve announcing its payments to treasury from 2012's earnings will be $88.5 billion, a record up from $75.4 billion in 2011. the fed's earnings include $80 billion it earned from interest on that $2 trillion portfolio

that it has of securities and other asset sales including 6.1 billion from the likes the aig securities. it gained $13.3 billion in the sale of u.s. treasuries. it looks pretty good the amount of money that the fed is sending the treasury, it helps reduce the deficit, it helps the treasury make its payments but the bigger question becomes what happens in the future? it's something being debated right now on the fed, what happens when that number begins to dough kleecline because of a sales or the interest the fed has to pay the banks on their excess reserve. do we go back to the old days the way things used to be in the $20 billion range or less? there was a large number on the deficit side for what the federal reserve is pay to fund the consumer finance protection bureau, a new agency created by dodd-frank. >> steve, a lot of information,

thank you for that. it's official, the president will nom name white house chief of staff jack lew as the treasury secretary. >> good morning, carl. this is going to happen in a couple of hours. some people are asking in light of the fact that jack lew is not a wall street guy, though he did work at citigroup for a while, he's not a business guy, why jack lew to succeed tim geithner? here is why. he has deep experience, started on the hill with tip o'neill, participated in the negotiations over the social security fix that were all agreed on during the 1980s. secondly, he served as budget director, big budget fights ahead on capitol hill over the debt ceiling, over long-term deficit reduction, entitlement programs including social security. he's got international experience from working in hillary clinton's state department and global finance and the global economy is a

principal concern of the treasury secretary. and finally, he's ban very low-key white house sfaf staff. that is the pattern president obama what has chosen for his staff picks. the betting is on his successor as chief of staff being another insider, dennis mcdonough, who is now the deputy national security adviser. >> first things first on that story. the top republican on the senate banking committee has come out opposing lew's nomination saying that he must never be secretary of treasury. on the cnbc newsline this morning, senator jeff sessions. good morning. >> good. budget committee, not banking. >> never is a long time, senator. it certainly sounds like a threat to filibuster. how serious are you? >> i feel very strongly about this. in 2011 when he was the omb

director, we hoped that there would be an historic bipartisan agreement about our debt course. he came before the american people, announced the budget that he had crafted and said, quote, our budget will get us over the next several years to the point where we can look the american people in the eye and say we're not adding to the debt anymore, we're spending money that we have each your, then we can work to bring down our national debt. that was utterly and totally false. his own numbers showed that the lowest single deficit we'd have in ten years was over $600 billion, and they rode that false spin for quite a long time. that's the reason they will not bring a budget to the floor of the united states senate because this kind of bogus rhetoric would have been exposed plainly and openly. the democrats could not allow that to happen. it got zero votes when actually it was brought up. this is not a healthy thing.

what he knows about the budget is how to manipulate it and how to manipulate the numbers and that's not what we need in a secretary of the treasury today. i just strongly believe we need a man of integrity, a woman of competence who can have bipartisan support. they say he's genual but in bob woodward's book, he's found to be obnoxious, dismissive and lecturing. the people i talked to were not appreciative of the way he conducted himself. >> you have not gone as far to say you will filibuster the nomination, right? >> we'll see what happens but i intend to oppose this nomination and we need to talk about the fundamental challenges of our nation and we need to know why mr. lew not on refused to produce a plan that would fix

our debt problem but actually attack people like paul ryan, who laid out a credible plan. and why he would misrepresent the impact of the budget he did submit to the senate, which of course was never brought up. those are -- this dwarves the kind of tax problem that secretary geithner had. this goes to the core of what a high government official should do, which is tell the american people the truth about our serious financial condition. >> senator, the critics have had other points. they've said he's hyper partisan, they said his time the citigroup was questionable given the fact that that bank was about to have a lot of problems. your criticism is about something he said about the budget two years ago. are those other criticisms red herrings? >> no, they're very important. i don't think he brings -- certainly doesn't bring the gravitas of former new york fed

chairman like secretary geithner and other very prominent people we've had at secretary of treasury, the premiere financial position in the united states government. even more important because our president has no training and no real understanding of classical business and economics. so i think there are a lot of reasons to be concerned about it. but this -- don't dismiss this little comment. it wasn't just a comment. this was a sustained partisan effort to misrepresent the financial condition of our country and how the president's budget would impact it. you see? i mean, so if you can't be honest about that and look the american people in the eye and be honest about that, then you've really, to me, disqualified yourself for an even higher office. >> the journal this morning, senator, says that senior gop aides expect him to get

confirmed, although obviously they say senior republicans could, in their words, prolong the process. do you actually believe he stands a chance of getting confirmed? >> i think members of the congress and the american people once we slow down here a bit and begin to ask ourselves why have we not reached a budget agreement? it's because in 2011 the president, jack lew, wrote a budget that would continue to spend and tax, add $13 trillion to the debt, yet they've told the american people we've got a budget that will not add to the debt and we're going soon be paying down our debt and the budget never balanced. the last seven, eight, nine, ten years, the deficits were surging upwards. so this was a bogus budget they

insisted on saying was a responsible budget. as i said, it was never brought to the floor of the senate because it would have been exposed for the bogus budget it was. to me this isn't just a false statement. this is the man at the center of a determined political effort to misrepresent the financial plan of this administration. and i just think this is a big deal. if you believe in truth, and i do, and objectivity, i think he should be held to account for this. >> senator, it certainly sets up an interesting afternoon as we hear from the president later today. appreciate you coming to the phone. thanks so much. >> thank you. >> senator jeff sessions of alabama. >> meantime teen retailers out with holiday sales. as with sales, the behavior of these stocks can be questionable. we'll tell you which to buy and which to avoid when we come back. and rick santelli is working on

something for a little later on. good morning. >> good morning. we have ira harris and it's always a fun interview with we have ira. we'll talk about some of the comments about mario draghi, why the yen is moving and will all these things really continue. you don't want to miss it in about 15 minutes. be there. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying...

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telecom and financials leading the way right now but retail has been one of the most

talked about sectors, especially after the holidays. teen retailers reporting holiday sales numbers. urban outfitters reporting record numbers while aeropostal slashes numbers and now looks at a4. >> just like teens themselves, shares reacting on a case-by-case basis. aeropostale, urban outfitters and american eagle all reporting different figures. urban outfitters, the strength really was e-commerce. it was a different stories at aeropostale. the teen retailers notes after black friday weekend sales and traffic slumped off and didn't pick back up. it has lowered its guidance

range from 20 to 24 cents per share from 31 to 36 cents previously. and american eagle comp store sales up 5% includingline sales but up only 1% excluding online commercial, much lower than the 12% seen last year. tiffany also reporting holiday sales. sales unchanged year over year. sales fell 2% at the flagship. as you can see shares are lower but significantly off the lows of the session. >> definitely some winners and losers today. thanks so much. >> i have breaking news on airlines. the u.s. department of transportation is out with its january report on flight delays, tarmac times, lost baggage. phil lebeau is with us for the

report. >> as we move into the winter season, things great little bit messy. when you look at the three airlines in terms of on-time performance, overall the industry averaged 85% on-time rate, hawaiian always near the top at 94%, followed by airtran and delta. the bottom three, american airline, 79.6%, certainly an improvement from the fall but one that is a concern from them at the bottom. jetblue and frontier all near the bottom at 81 and 82%. handling of baggage continues to be at historic lows for those flying in the month of november. >> we'll see how the rest of the winter looks. what is mark zuckerberg planning to unveil next tuesday? we have two tech gurus lined up to take some guesses.

and herbalife ceo mike johnson is coming up life. "squawk on the street" will be right back. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece?

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could there be a board battle brewing at morgan stanley? yesterday it was revealed the hedge fund took a stake in the company. it expects this to be a restructuring play and did cite concerns with the board saying directors are paid too much and that morgan stanley needs to set the right tone at the board level, looking at governance principles and practices. they tried to restructure what they called moribund boards. roy bostock, against which third point has fought battles against

in the past. third point said it wants morgan stanley to show reinvention begins at the top, either change board practices or consider an upgrade at the board to reflect best principles. calls to morgan stanley have not been returned. >> thank you, mooary thompson. >> facebook is building up excitement for a mysterious event on january 15th. "see what we're building" is all that the invite says. what might be we expecting them to unveil? good morning to both of you. >> hi. >> ellis, obviously we have little to work with here this morning but the world "building" does connote some kind of hardware, doesn't it? could this be a phone if. >> it seems to be connoting some type of hardware but facebook is a services company, not a hardware company. i would expect something more along the lines of a smartphone

platform or revamped search or just progress on building their new section of their campus they're working on. but one thing we know for sure is their stock just hit a five-month high after they made the announcement so better be something good. >> low of 17 christina, it is almost to 31 this morning. i wonder overall is the feeling among tech gurus that the company's relevance is getting larger just as its stock prices? >> i think that its relevance is becoming proven. i don't know if it's getting larger but i think it's becoming proven. as ellis said, i think the language in the invitation indicates it's something big, whether it's a new campus or phone or some sort of platform. this has the feeling of a major announcement. >> christina, zuckerberg was asked about a phone at the tech crunch conference not long ago. he seemed to think it wasn't

something they wouldn't pursue. why the turn around no? >> because you have to be in mobile. this is a space they really need to be in. whether it through their own platform they license to others or their own full phone, mobile needs to be a space they seriously consider being in. if they weren't considering their own phone, i'd be very surprised. >> ellis, a lot of software guys say there's a certain joy of not having to worry about manufacturing, supply chains. hardware it's a lot more difficult. do you think they really want to wade into this kind of -- this new territory? >> i actually don't think they do. i think if they would it might be in the way, way cheaper phones category to hit on some markets where facebook hasn't spread that far yet. when steve jobs said we're not a

hardware company. they were a hardware company when they u-turned on that. >> are they a company that puts out this invitation often? >> they're not the company that sends out these type of cryptic announcements. usually their events are structured around something like f-8, which is their development conference. they very rarely have these sort of events where you're unclear of what they're talking about. i think the last they were talking about was for their gifts product and that was here in new york in november. that's the last time i can remember them sending out a major invites to the press. >> maybe in the midst of so much attention being placed where ellis is right now, you want to be a part of that story. thanks for your time. we'll see what tuesday brings. >> there are a few minutes left from europe's trading day. interesting news from that side of the world as well. we'll get the close and the

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the news on the actual rates from the ecb were not a surprised but some of the thing draghi said about it were. >> you hit the nail on the head. many caught on the wrong side of the market today because last time they met, last time round they were divided on the decision on whether they should cut. today they were unanimous not

to. >> the european markets are closing now. >> so it has taken a lot of headline indices into negative territory. let me just take you back to that news conference in which mario draghi, the head of the ecb, said maybe there lab recovery kicking in on the second half of this year. no change in the inflation outlook. that was critical. a lot of the conference was taken up on the division between what's happened on financial markets, higher stock markets, volatility falling, strong capital inflows and peripheral cash balances rising for people's bank accounts on the periphery of europe. against that you have an economy which arguably is still very sick, particularly with greek unemployment today we learned rising to 26. 8%. but at the margin a more hawkish message. just to reiterate, the ecb not divided on the prospect of cutting rates further, unanimous

not to cut for now. incidentally, he also said this was not the beginning of an exit strategy from the huge amount of money they have pumped into the eurozone at this stage. let's listen to what he had to say. >> to define a turning point, you need to see some signs of recovery, which we have foreseen but later in this year. >> so the immediate outcome of this is seen on the foreign exchange markets where you'll see the way in which the euro has bolted higher. somebody just wrote it's quake to are a euro bear at the moment. the stock markets conversely were taken further into negative territory. let's look at the three major indices. can you see the way in which they tracked down during the course of the segts. the other thing that i should mention to you before i hand you back is in advance of the ecb today, the spanish had a very

good auction of debt. they deliberately were defensive and auctioned a two-year debt, which is exactly the direction the ecb would come in to buy debt if there was an emergency. i think this is a ten-month flow now on the spanish two-year yield but what a trek it has been during the course of the last year. >> nice way to start the year anyway, in spain anyways. let's get back to the news desk. michelle? >> it was about half an hour ago that representatives cummings and waxman released documents that might suggest the current ceo of walmart knew about allegations of bribery in mexico in early 2000. there are some other interesting stuff. there's also a link drawn to the former maker of mexico city,

manuel lopez. he tried to run for president, he lost. there are payments to the government totally 3.5 to 4 million pesos. the mexican government announced they had done their own internal investigation and cleared themselves of any of these issues. and then one final point, the lawyer involved in this situation felt very much that the whistle lower in this case wanted to get paid in order not to reveal these allegations to other people. back to you. >> as you pointed out in the last hour, the stock may or may not follow what the news sis appearing to say. >> correct. >> bob, you were saying you might have expected more out of the chinese data. >> chinese exports much more than expected. it matters a lot because that's

one of the engines of world growth and that's going to be a big increase, big help to their gdp, 7.8% for the fourth quarter. that's good new overall pup would think there would be a little more follow-through. there is follow-through in the exchange traded funds areas associated with the international area. these big etfs have been on its hair for the last month. china and skrp are very hot investments right now. this is the big etf for china. pretty good volume. it been moving up dramatically. the japanese index has also had good volume. of course a new prime minister, lots of stimulus coming from japan. and even the emerging markets, the van guard, the eem that competes with it, they've also had a very good month. these are continuing an up trend that's been going on for about 40 days now. let's show you some other things

here. you would think on a day like today with the good news out of china, the dollar weak, would you see more energy out of the material sector. i really don't. financials are coming back. they had a rough day yesterday. there was a bank of america downgrade. let me just move on. i know everybody's concerned about aerpostale and everything that's going on. i just want to show you something. aerpostale is a disaster. this is aerpostale for a year. this is american eagle up here and gap. do you see the outperformance? it been dramatic. this didn't happen today. i know american eagle came out and it's down a little bit today but by and large they affirm their earnings situation. these stocks are -- aerpostale has been a dramatic underperforming. i'm more concerned with ascena.

they renamed themselves. they used to be dress barn. that's a little more disconcerting to me. by and large a number of companies have come out with generally positive comments in the last few days, costco, nike, walgreens, monsanto have come out with positive comments about their earnings picture. the direction and trend is not entirely clear on earnings. >> unless you're urban outfitters. >> they did really well. >> thanks, bob. let's get to rick santelli in chicago with a look at how the bank of england and the ecb let news on their secrets. hey, rick. >> absolutely. that's what the underground that ira's famous blog and it free if anybody wants to read ira's thoughts. what secrets did they let news

on? welcome to the show. >> really no changes. the interesting thing was in draghi's news conference, the question was asked to him and the most important question is what are they going to do more about the the unemployment situation in draghi said that's not his mandate. i was waiting to see if they were going to discuss nominal gdp because we know that this is now the new game. didn't quite get there but he alluded to to it. the second part, the guy asked a question, well, everybody else is trying to depreciate their currencies and we've seen it on the euro-yen. the guy asked that question, draggy's response i thought was almost laughable because he thought this is not going on. the g-21 gave us one commitment. >> i love when you're on, ira.

greece is now over 25%, what is it 26 on the unemployment rate? portugal is in that 25 camp. the eurozone anding ing and agg 25%. i like your question, g-20. listen, no matter what central bank, remember when you were a kid and you used to play ping-pong with the kid next door and you bet a thousand, a million and you play double or nothing until everything was even. we have every major economy doing this. it's almost like self-destruction insurance, isn't it? >> everybody is pushing the same way. we're starting to see this with the japanese. we talked about this ad nauseam already. >> what do you do if you're one of the german car makers? >> watch the luxury end, the ad -- the audi, the bmw.

that cross traded down to 94. we're now at 116. that's a 22% move. >> the better than thy neighbor aspect is just going to get more heated. as they slip into less economic growth despite what he said in the press conference, they want to export more cars and it going to turn into whose currency affects their exchange rates the most on exports. >> there's no question about it. i told you i brought this book on i just paid for, a friend of mine personally published, go to ira harris, order it and i'll send it out to you. it's $10 plus shipping. >> he doesn't make any money. >> he gave me the original printing. if you want to know what's going on in europe, read this book. >> that was the best sale pitch, yra with a "y," not an "i ".

>> pebble technology ready to ship with the item that raised all that cash to its customers after months of waiting. we'll get the first look and talk to the company's ceo right after this. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak.

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the co-founder and ceo of pebble joins us from sin city this morning. eric, good morning to you. >> good morning. >> for the five people who have not heard about in watch, will you explain what it does, why it's special and then also why it's taken a little bit longer than expected to roll out. >> sure. so pebble is a smartwatch that connects by blue tooth to your smartphone. when you get a new e-mail or text message, it vibrates and

displays the key message on your wrist. the idea is instead of pulling out your smartphone, you can glance down and see the key part of the message. to dismiss the notification, you can just move your wrist, right? >> yeah. if it's a really important call you can take it or if it's someone, you know, someone can you brush off, you can just cancel it right there. >> we won't name names. you're going to ship them on january 23rd, i believe, but the original promise was for last september. what happened? too much demand? >> yeah. we originally launched our project on kick starter in april. our goal was to sell 1,000 watches. after 30 days we had sold 85,000 watches. so the scale of our manufacturing had to go up by quite a bit. so we ended up moving our operations -- our manufacturing

operations from the bay area. we moved them overseas and ramped up a production line that can spit out 15,000 pebbles per week. >> you said when you're making a couple thousand watches, you can afford a few missteps. when you're making 85,000, you have to make sure every piece of the puzzle fits together. >> exactly. >> did you have to complete litsch revamp your production line? what was that reset like for you? >> it was a combination on the supply chain side, we had the world supply of several of the components we use in the watch. when we were planning to make 1,000 or 2,000 watches, we have been able to practically buy them components on line. that's within one of the things changed. the other was the sheer size of the assembly. we will to have that line ramp up to produce quite a few watches per hour and that wouldn't have been possible with the first pass of our design. >> it's been said that wearable

computing in general is something we're all going to have to get used to. there's you, we know what google is doing with wearable goggles, so to speak. it's in the first inning. are we even in the national anthem yet? >> i think you'll see more and more accessories with connections to the internet. there are more and more people with smartphones and what they really have in their pocket is a data plan. instead of more devices adding a 3g kerconnection, i think you'l see talking about blue tooth and connections to the phone instead of replicating that on a separate device. >> before we go, if anybody wants a phone at this point, what's the ordering process like? >> getpebble.com, we have a

preordering process set up. that's the best way to get one. >> best of luck as you go to the 23rd. >> first it was ackman and then lowe, but now the s.e.c., the ceo of herbalife michael johnson is speaking out about all the controversy surrounding his company. you do not want to miss this interview coming up next. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time?

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herbalife holding an investor and analyst committee meeting today as the hedge fund rages over the business model. ceo michael johnson join us us with an exclusive interview. kate, good morning. >> good morning. thank you so much, michael johnson, for joining us. i know your time is limited. you said you wanted to shred the manager attacking your business model and your ethics there. did you shred him? >> i never said i wanted to shred bill ackman. those are your words, not mine. we just wanted to take care of some things that were said that were just frankly wrong about our company and i think we did that. >> you talked quite a bit about your product, why you're popular, what the science is behind them. it felt in some ways a recruitment tool in and of

itself ash w itself, a way it appeal to potential new distributors. was that your intention? >> there were a lot of people in the room. new distributor possibilities. no, i'm just kidding. product is the base of any good company. at the base of our company is a great product. we are building a better product every day and we're very proud of it. >> let's talk more about that customer base. you said the last time i spoke to you, which was live a couple of weeks ago, that 90% of your product is sold outside of the network, meaning not in a nutrition club, for example. tell us more about that statistic. you also said historically you don't track the numbers. where does that 90% come puerto rico -- from? >> it was a misstatement. 90% of our distributors biography our product, let me clarify this, buy it for one reason and they buy it for

self-consumption. that was a misstatement on that day. i was kind of hyped up that day, wasn't i? >> it was a tough day. ackman came out swinging and you were a little upset in the moment. >> we have a tremendous amount of customers. they have shown our customer environment is much larger than anyone out in the world thinks that we have, especially one man who is trying to put a position forward that we have no customers, which is really a strange position in a company like ours, and we have thousands of people walking into nutrition clubs as you and i speak. >> to the best of your knowledge, though, michael, what percentage of your products are sold outside the network and what are inside the network? >> i don't have a number for pup. >> you don't have a ballparkest senate. >> i got in trouble doing that last time. let's go back, check the facts. we know who we sell to. we do not know who they sell to. and there's nothing wrong with the way we do our business. there is absolutely nothing wrong with it.

>> let's talk a little buiit mo about the customer base and opportunities for upward mobility. what percentage or ballpark estimates, how many of your distributors actually clear roughly the $100,000 mark per year? do you have a sense of that? >> oh, yeah, we know that. 100,000 in sales? >> no, in actual earnings. bill ackman says only 1% only make the top level. des said earlier something like 80% make more than sponsor over time. those are apples and oranges. can you rectify the data point. >> our distributes buy the project and resell it by gets the margin. some work at 15% margin, some work at 40%, some 50%. we can't exactly track that. if you're a distributor of mine,

i don't know what you sell the product for. if you operate on daily consumption, it's usually a 100% margin. if you sell over the internet, you're probably selling at a lower margin. i can't give you the exact margin to say here is distributor x and she made y inside the company. >> this pyramid scheme accusation has dogged you over time. the country of belgium put in litigation, it's come up in private litigation. bill ackman is contending you are a pyramid scheme. you talked about reasons why you were not. there was compelling evidence from lieberman associates and former distributors and their feelings about the products in the company and the representative from northwestern university. both were hired to make these assessments by herbalife. >> i don't think you can buy ann

kogly. we said no holds barred we want you to look at us. she was being paid for her services. she is not going to indict her career, her reputation on giving us a piece of information that will enhance what we want her to say. she speaks as a professor at the university of northwestern, kellogg school of management. ann is not going to come in and be persuaded by a few bucks that anybody is going to pay her. the lieberman research absolutely paid them but are they going to mortgage their whole company on giving one company a falsified research of some sort? i think can you put high what should i say high credibility in both of those people. >> when the ackman short was first revealed by us on december 19th and you came on our air, at the time you considered it to be part of a short seller conspiracy, if you will, to drive down the price of